Simplified Employee Pension IRA
A Simplified Employee Pension IRA (SEP IRA) is a type of traditional IRA for self-employed individuals or small business owners. Any business owner with one or more employees, as well as anyone with freelance income, can open a SEP IRA. Contributions, which are tax-deductible for the business or individual, go into a traditional IRA held in the employee's name. Employees of the business cannot contribute — the employer does.
Savings Incentive Match Plan for Employees
A Savings Incentive Match Plan for Employees (SIMPLE IRA) is another type of traditional IRA for small businesses and self-employed individuals. Employees can contribute to their SIMPLE IRA and the employer is required to make a contribution on the employee's behalf — either a dollar-for-dollar match of up to 3 percent of salary or a flat 2 percent of pay — regardless of whether the employee contributes to the account.